At what rate of simple interest per annum will a sum of money double itself in 8 years?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → 12.5%
A sum doubles when the interest equals the principal, that is, the interest is 100% of the sum. At simple interest this 100% is spread evenly over the years.
Interest in 8 years \(=100\%\) of the sum
\(\displaystyle \text{Rate}=\frac{100\%}{8}=12.5\%\) per annum
The rate is 12.5% per annum. (6.25% would double the sum in 16 years.)